As part of Investment Promotion Initiatives and in cooperation with Al Tamimi & Co.
SCA discusses with Representatives of Investment Funds and Portfolios methods to stimulate Indirect Investment as part of the Overall Vision of the UAE
Dr. Obaid Al-Zaabi:
"We have made amendments to the decision on regulating real estate investment funds to achieve more flexibility required for their development.
We cooperate with the Ministry of Economy to open the door to convert limited liability companies and private companies into public joint stock companies
We conduct studies in cooperation with the Ministry of Economy to review the maximum selling of the share of the company upon the transformation"
In the course of its efforts to promote its communication with the representatives of the industry, identify the requirements of investors and enable direct communication with them, the Securities and Commodities Authority (SCA) held a panel discussion - in cooperation with Al Tamimi & Co. Law Firm. The panel discussion addressed the role of the SCA in the development of investment, the capital markets, market developments and the various initiatives of the SCA.
Participants in the event was included a number of experts and business people who are interested in the securities industry in the UAE, as well as about 40 delegations representing the major investment banks, investment management companies and representatives of the SCA and financial markets. The panel discussion was presented by Hossam Hourani, Managing Partner of Al Tamimi & Co. Law Firm and his partners. Dr. Obaid Al Zaabi, CEO of the SCA, delivered a speech as the keynote speaker in the panel discussion.
Dr. Al Zaabi explained that the SCA is working to develop the markets, and always welcomes interaction with the investors and the industry, and wishes to receive their views and development proposals to be considered and applied. He added that SCA closely cooperates with the markets in order to complete the requirements of upgrading the UAE markets to an advanced market on the global indexes. He pointed out that the SCA has initiated on the implementation of the model of self-regulatory organizations (SRO), in line with the best international practices, under which the markets were delegated some functions and authorized with powers to license certain financial instruments and activities. He also enumerated the initiatives of the SCA that aim at converting the financial markets from the vertical to the horizontal pattern, by separating the central clearing and central custody activities from the markets. He noted that the central clearing regulation issued by the SCA has gained recognition from the European Union.
Dr. Al Zaabi pointed out that the function of electronic disclosure has been transferred to the financial markets by the use of XBPL, as it has become compulsory now. New procedures are being implemented for listing in the UAE financial markets, investors will be able to submit their listing applications online, which will ensure more efficiency and speed in the listing process. In addition, the financial markets will issue securities ID numbers and securities ISIN codes.
The CEO also confirmed that the SCA has gone a long way in complying with the principles of the International Organization of Securities Commissions (IOSCO) to be ahead of major countries in this regard. Hence, the SCA is being assessed under the Financial Sector Assessment Program (FSAP). The SCA also managed to become a member of the Board of Directors of IOSCO as well as a co-chair of the working Group concerned corporate governance in the Middle East and North Africa region of the Organization for Economic Cooperation and Development (OECD). The CEO of the SCA was elected to serve as Vice Chair of the Emerging and Developing Markets Committee for the period 2018-2020 in the IOSCO.
With regard to foreign investment, Dr. Al Zaabi indicated that the SCA works closely with the Ministry of Economy to open the door for the conversion of limited liability companies and private companies to public joint stock companies. In cooperation with the Ministry, the SCA is conducting studies to review the maximum limit for the sale of a share of the company at the time of conversion. He expected the new foreign investment law will allow for greater flexibility in foreign ownership at larger percentage of specific industries. He pointed out the ongoing coordination with the Central Bank to transfer the functions of investment management companies to the SCA.
Dr. Al Zaabi stated that the UAE ranked ninth glovally in the World Competitiveness Reports issued by the World Bank in the area of protecting minority investors. He revealed that the SCA is currently working on developing the Regulations as to Governance to include the concepts of sustainability, social responsibility and counter bribery.
As for small and medium-sized enterprises (SMES), Dr. Al-Zaabi noted that the SCA is studying with major funds, such as Khalifa Fund, the means to provide a platform to facilitate the financing of sych types of enterprises. He added that the SCA is working to complete the automation of its services and operations in a sophisticated and interactive manner.
He added that with regard to the new regulations, the SCA has developed a plan to address the various regulations required by the capital markets in the UAE to facilitate the issuance of any securities. In this context, the SCA recently approved the Regulations as to Derivatives Contracts; and has previously approved the rules of operation for the Dubai Financial Market on Derivatives. In addition, the SCA works with free zones authorities in the UAE to allow the companies of these zones to offer and be listed on the local markets by providing an independent platform for them. On the other hand, the SCA is working on the issuance of regulations relating to financial technology (FinTech) in cooperation with the major consultancy entities. Furthermore, the SCA is currently conducting the necessary studies on the initial currency offerings (ICOs), in addition to initiatives on Block Chain.
Mr. Hossam Hourani, Managing Partner and Founder of the Capital Markets Department at Al Tamimi & Co., confirmed in his presentation to the penal discussion the importance of the services provided by the Securities and Commodities Authority to investors from all over the world. He expressed the pride of Al Tamimi & Co. to work with the SCA since its establishment and its appreciation of the manner in which the SCA cooperates with all partners and stakeholders to achieve a sustainable investment environment in an advanced financial market.
During the second part of the penal discussion, the session was opened to the questions from the attendees, which addressed a number of topics such as public offering, the mechanism of book building, and promoting the investors' confidence in the financial markets.
On the existence of applications from newly established companies for IPO, the SCA confirmed that there are controls for this type of companies and explained that with respect to any new offerings, they will be limited to institutional investors.
Concerning the mechanism of book building and allocation mechanism for investors, the SCA explained that the regulations on public offering contained all details relating to book building, percentage for individuals and institutions, and the allocation mechanism whether for individual or institutional investors; and that the SCA is studying the IPO applications carefully in accordance with the interest of industry in the UAE.
In its response to a query concerning the role of the SCA in promoting investor confidence in the markets, the representatives of the SCA confirmed in the penal discussion that the issuance of good legislation contributes to building confidence, but there are other roles required from all parties, whether corporate boards of directors (such as improving and implementing governance requirements), the brokers or the financial markets. They noted that the SCA has launched a national project to raise awareness of investors in the financial markets in the UAE and it uses all media channels (video, audio, print and digital) to implement it and to inform the investors on the information and guidance that contribute to improving their performance in the markets. Moreover, the SCA has introduced in its new organizational structure a department to follow up the news of companies and communications. Thus, the integration and cooperation of all parties will enhance investor confidence in the markets.
With regard to the existence of a mechanism to ensure stability of the stock prices following the IPO processes, the SCA confirmed that it has agreed to the mechanisms applied in some of the recent IPOs, and that it has coordinated with the markets in this regard.
In response to a query on the initiatives of the SCA to attract listing of international companies, the SCA pointed out that there are regulations on joint listing. There is also the possibility of listing foreign companies. Representatives of the Dubai Financial Market indicated, during the session, that there are arrangements that allow investors to trade in both Dubai Financial Market and NASDAQ Dubai using the same investor number.
Representatives of the SCA confirmed that the SCA aims to develop the real estate investment industry. To this end, the rules and controls for real estate investment were amended to provide more flexibility for this type of funds. In addition, rules for the listing of mutual fund units of the various types were approved.
On their part, the financial markets have signed a memorandum of understanding with the Department of Lands and Prosperities for the purpose of achieving full coordination between all concerned parties.